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Pound/Euro, Pound/Dollar and this week’s economic data

Good morning. Today we’ll take a quick look at the major currency pairs Pound/Euro and Pound/Dollar, before taking a look ahead and what could happen to exchange rates this week.

Sterling/Euro (GBPEUR)

This currency pair seems to be unable to break out of the range that it has been trading in for quite some time, fluctuating between €1.12 and €1.13. Last week it hit the upper end of this range, before and upbeat report from the European Central Bank strengthened the Euro, pulling the rate lower again. Despite the UK economy performing very well of late, the spectre of Brexit continues to loom over Sterling, and this is keeping the Pound from making any gains.

Read below for further information on what economic data is coming up this week that could move the pair.

Sterling/US Dollar (GBPUSD)

Pound/Dollar is currently the highest it has been since the EU referendum. Euro/Dollar is at a 3 year high. The reason for this is partly due to USD weakness. Despite the fact the US economy is performing well, markets were hoping for several interest rate hikes from the USA this year. It’s now looking like while rates will be going up, this will probably only happen twice. This is not as hawkish as the markets had been expecting and so the Dollar has lost value and become cheaper to buy.

The increase in the value of the Euro has also had an impact. As the single currency gains in strength, investors have been selling USD to buy Euros, exacerbating the move. USD and EUR often move inversely and that’s what we have seen over the last week.

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This weeks data releases

Monday 15th January 2018 – It’s a rather quiet start to the week, with the only UK even being a speech by one of the members of the Bank of England just after 6pm tonight. Elsewhere we’ve already had EU trade balance figures at 10am, but the numbers were largely as expected, there was little impact on the currency markets.

Tuesday 16th January 2018 – Today is probably the most important one of the week for the Pound, as we’ll see the latest Inflation numbers from the UK in the form of the CPI and PPI. A higher than expected reading would mean a chance of interest rates going up. This would strengthen the Pound, however a poor reading would have the opposite effect.

Wednesday 17th January 2018 – Nothing from the UK today, so GBPEUR will be driven by EU inflation numbers, released at 10am. It’s an important day in Canada so those looking at GBPCAD should be aware of the latest BoC interest rate decision, policy report and accompanying statement, all released at 3pm.

Thursday 18th January 2018 – Another quiet day in the UK, so focus will be on Australia and the USA. Starting down under, we have the latest jobs and employment numbers, that could move GBP/AUD rates. Over in the USA we have Jobless claims and housing data that could move GBP/USD rates.

Friday 29th January 2018 – We have UK Retail Sales numbers at 09:30am this morning. They often have an effect on the Pound, as they are such a good barometer of the overall health of the economy. We expect monthly growth of 0.3%, and if the actual number differs then expect some movement in the Pound accordingly.

Have a good week, and contact me today if you would like to discuss this post further or get a quote.